Copy of 37747771 Finanl Ppt Export Finance

8/6/2019 Copy of 37747771 Finanl Ppt Export Finance

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Introduction to export finance

Export in simple words means selling goods abroad.

International market being a very wide market, huge

quantity of goods can be sold in the form of exports.

Success or failure of any export order mainly

depends upon the finance available to execute the

order .


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Purpose of Export Finance-

An exporter may avail financial assistance from any

bank, which considers the ensuing factors:

Availability of the funds at the required time to the

exporter.

Affordability of the cost of funds.


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Types of Export Finance.

The export finance is being classified into two

types viz.

Pre-shipment finance.(180 days-270 days) Post-shipment finance. (180 days)


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Some concepts of Export Finance

Forfeiting --is a mechanism of financing exports.

By discounting export receivables

Evidenced by bills of exchange or promissory notes.

Without recourse to the seller (viz. exporter)

On a fixed rate basis (discount)

Upto 100 percent of the contract value.


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FACTORING- A contract by which the factor is to provideat least two of the services, (finance, the maintenance of

accounts, the collection of receivables and protection

against credit risks) and the supplier is to assigned to thefactor on a continuing basis by way of sale or security,

receivables arising from the sale of goods or supply of

services.

In simple words...Factoring turns your receivable into cash

today, instead of waiting to be paid at a future date


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Major Institutions Involved in

Export Finance Reserve Bank of India (RBI)- The RBI with its head

quarters in Mumbai and several regional offices is the central

banks of our country to authorize extend and regulate export

credit and transaction including foreign exchange affairs. RBI

does not directly provide export finance to the exporters, but

it adopts policies and initiates measures to encourage

commercial banks and other financial institutions to provide

liberal export finance. Two Departments- i) Industrial and credit department

ii)Exchange Control Department


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Exim Bank- Set up by an Act ofParliament in September

1981.

Wholly owned by the Government of India.

Exim is the principal financial institution in the country for co-

ordinating working of institutions engaged in financing exports

and imports.

Offices

Head office Mumbai.

A network of 13 offices in India and Overseas.

Domestic Offices-

A

hmedabad, Bangalore,C

hennai,Hyderabad, Kolkata, Mumbai, New Delhi, Pune.

Overseas Offices - Budapest, Johannesburg, Milan, Singapore,

Washington DC.


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Functions of Exim Bank.


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ECGC- EXPORT CREDIT GUARANTEE

CORPORATION OF INDIA LTD.

ECGC is a company wholly owned by the GOI. It

functions under the administrative control of the

Ministry ofCommerce and is managed by a Board of

Directors representing government, Banking,Insurance, Trade and Industry.

OBJECTIVES OFECGC:

To protect the exporters against credit risks, i.e. non-repayment by buyers

To protect the banks against losses due to non-repayment of

loans by exporters.


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PRE-SHIPMENT FINANCE-Pre-shipment is also

referred as packing credit. It is working

capital finance provided by commercial banks

to the exporter prior to shipment of goods.

The finance required to meet various

expenses before shipment of goods is called

pre-shipment finance or packing credit.


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IMPORTANCEOFFINANCE AT PRE-SHIPMENT

STAGE:

To purchase raw material, and other inputs to

manufacture goods.

To assemble the goods in the case of merchant

exporters.

To store the goods in suitable warehouses till thegoods are shipped.

To pay for packing, marking and labelling of goods.


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SOMESCHEMES IN PRE-SHIPMENT STAGE OF

FINANCE

I. DEFERRED CREDIT-Consumer goods are normally

sold on short term credit, normally for a period up

to 180 days. However, there are cases, especially, in

the case of export of capital goods and

technological services; the credit period may

extend beyond 180 days. Such exports were longer

credit terms (beyond 180 days) is allowed by the

exporter is called as deferred credit or deferred

payment terms.


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POST-SHIPMENT FINANCE

MEANING:

Post shipment finance is provided to meet working

capital requirements after the actual shipment of

goods. It bridges the financial gap between the dateof shipment and actual receipt of payment from

overseas buyer thereof. Whereas the finance

provided after shipment of goods is called post-

shipment finance.


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Importance ofPost Shipment

Finance. To pay to agents/distributors and others for their

services.

To pay for publicity and advertising in the over seas

markets.

To pay for port authorities, customs and shipping

agents charges.

To pay towards export duty or tax, if any. To pay towards ECGC premium.


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Conclusion and findings

Export Finance is a very important branch to

study & understand the overall gamut of the

international finance market.

Availability of favorable Export finance

schemes directly impacts the local trade,

encourages exporters, enlarges markets

abroad, improves quality of domestic goodsand overall helps the nation boost its

exchange earnings.

Copy of 37747771 Finanl Ppt Export Finance

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